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Low inflation helps give home owners an interest rates reprieve: RateCity

Sluggish inflation figures mean the RBA will almost certainly leave interest rates on hold when they meet for the first time this year on Tuesday.

RateCity’s RateForecaster shows 22 of the 23 economic indicators studied point to the RBA leaving interest rates at record lows.

RateCity money editor Sally Tindall said we would need to see significant movement in inflation numbers, currently at just 1.9 per cent, before the RBA could justify hiking rates.

“We know the direction for interest rates is up, but until inflation gets over the coveted two per cent mark, it’s unlikely the RBA will hike rates.

“Lack of wages growth is another culprit. Without substantive increases in pay its unlikely the RBA will hike rates, particularly with household debt at a record high.

“The lack of movement in rates means debt laden home owners continue to enjoy Australia’s longest run of record low interest rates – but that does not mean they should be complacent.

“For many people now is an opportune time to refinance and get ahead on their mortgage repayments, so they have a buffer for when interest rates eventually rise.

“There are currently dozens of lenders offering variable rates below 4 per cent, starting from 3.39 per cent,” she said.

Source: RateCity.com.au

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